Husula and Sage Mesa gas line: information meeting

Thursday, October 22, 2015 at
West Bench Elementary School Library
7 pm to 8:30 pm
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The Regional District of Okanagan-Similkameen and FortisBC will be hosting an information meeting for Sage Mesa and Husula Highland residents to gauge public interest in the possibility of installing a natural gas main to Sage Mesa and Husula Highlands properties. FortisBC and RDOS representatives will be in attendance to discuss the proposed gas main project, energy efficiency savings and implications for homeowners.

Comments

A comment from a West Bench resident. Most of West Bench residents have access to natural gas at their lot lines. But there are other issues:

[...] we have electric heat and did a reno in 2010-2012, upgrading a number of things including my electric heating system. Someone wasn’t spilling the beans about the impending electrical rate increases that ensued not long after, and despite having energy audits done and following the recommendations from them, the energy upgrades weren’t the most cost effective approach given the change in pricing structure ( I’m still steamed about that but I promise not to digress into that rant, at least for now.)

I do have natural gas on my street but my driveway is 300+ feet long and it would cost me $8.5k to install gas, plus a new furnace, so roughly $10 to 11k. It would take me maybe 10 years to pay that off and that assumes that the natural gas prices don ‘t increase substantially in 10 years and that we stay in the house that long.

My gut instinct is that we would not proceed with that because we’ve already spent $10k to upgrade our heating system only to have the goal posts moved. We have done a lot to reduce our power consumption but we are not where we anticipated we would be – we are close, but not quite back to where we started. We are not risking another $10k.

I'll just say that having gas lines on the street doesn’t fix the impacts caused by the rate increase for all of us in the greater West Bench, and to please keep hammering away at Fortis on the rate issues.

The stated purpose of Fortis's two-tier "conservation rate" is to provide incentives for electricity conservation. The problem with the two-tier structure is that different households have different baseline usage rates. For example, households with large families use more electricity in total than smaller households even though the per-person use of electricity is almost certainly lower in a larger household (energy economies of scale). Large households are thus effectively penalized by the two tier system simply because they are large households. Small households (one or two people) in contrast would have to consume mightily to reach the two tier rate. So as an incentive mechanism, the two-tier rate is clearly flawed. Large families have an incentive to reduce electricity but no degrees of freedom to do so (other than getting rid of household members). Smaller households have no incentive to conserve since they never feel the sting (and believe me, sting is understating it) of the two-tiered system.

The failure of the two-tier incentive is even more egregious for people who just happen to have electric heat. Keep in mind that "electric heat" includes the ultra efficient ground source and air source heat pumps that Fortis and BC Hydro were promoting so heavily in the past. Like a large household, the fact that your house is heated with electricity is hard to change. And for many households in rural BC with no natural gas service, it is effectively impossible to change. These rural residents thus have a strong incentive to switch away from electric heat but absolutely no means to do so. In contrast, households with non-electrical heating can be profligate users of electricity without hitting the existing two-tier threshold.

A related issue is the following: Does it make sense to incentivize people with access to natural gas to switch away from electrical heating? After all, most electricity in BC is generated by hydroelectric dams (renewable) whereas natural gas is an unrenewable fossil fuel that evolves CO2 when combusted. Moreover, the efficiencies of electrical heating systems are higher than combustion-based systems (and much higher when the electrical system is a heat pump).

The bottom line is that the "conservation rate" fails to achieve that which it purports to achieve. It is too simplistic to provide appropriate incentives. Instead, it provides no incentive (small households with gas heat) or perverse incentives to simply swap out electrical heat in order to side step the conservation rate (which is what we are seeing with this project).

In our discussion with Fortis two things are clear:

They know all this

They never wanted a two-tier conservation scheme

Instead, they place the blame on the BC Utilities Commission. That is why the topic of our discussion with Minister Bennett at UBCM was "Utilities board accountability". The good news is that the Minister clearly understood these concerns and was working towards addressing them. The wrinkle is, of course, that "commissions" are meant to be protected from political meddling. Still, it seems to me that some political meddling is justified in this case.

Now our job is to avoid the same errors when we implement a water pricing scheme for the West Bench. As the two-tiered debacle shows us, incentives are extremely tricky to get right.

15 years ago, when Terasan was the gas provider, the cost of a gas hook up was a flat rate. While I don't recall the exact amount, it was less than $500 and one had to assume that Terasan wanted new customers to sell its gas to, and therefore reduced the barriers to have tbat happen. Now that Fortis is both the gas and electrical utility, we have to buy from that company whether its electricity or gas, but there is no competition from one side or another to get new customers. Maybe if Fortis went to that model of flat rate hookups it would help some properties hook up to gas. As for the BC Utilities Commission, it may have had a hand in the the 2 tier rate, but remember that ultimately Fortis is revenue neutral - it would get the money one way or another. With Smart Meters coming on stream, it isn't clear how the rates will be affected. There are a number of factors that will affect our energy costs in the future, and it isn't clear yet how they all fit together and what the outcomes will be for the average person. These include the renegotiation of the Columbia River Treaty, the potential development of the LNG industry and the Site C Dam, in addition to Climate Action. I suspect that the Utility Commission is aware that there is some overall strategy that incoporates all these factors and more,and definitely bears some responsibility for our rate setting. It is noteworthy too that the conservation rate only applies to residential and not industry. Difficult for the average person to know what solution is best in the long run.